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Chapter 11. – A savings account pays interest, has no maturity date, and allows funds to be withdrawn at any time without penalty.savings account –

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Presentation on theme: "Chapter 11. – A savings account pays interest, has no maturity date, and allows funds to be withdrawn at any time without penalty.savings account –"— Presentation transcript:

1 Chapter 11

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3 – A savings account pays interest, has no maturity date, and allows funds to be withdrawn at any time without penalty.savings account – Money market deposit account (MMDA) pays relatively high rates of interest, requires a minimum balance of $1,000 to $2,500, and allows immediate access to funds. Money market deposit account  Time deposits require savers to leave their funds on deposit for certain periods of time, or maturity. Time depositsmaturity  Time deposits are often called certificates of deposit (CDs), or savings certificates.certificates of deposit

4  After the stock market crash of 1929, the Federal Deposit Insurance Corporation (FDIC) was created to protect peoples’ funds.  Each person’s funds in a particular savings institution are insured up to $250,000.

5  Corporations are formed by selling shares of stock.  Stockholders are people who have invested in a corporation and own some of its shares of stock. (They own part of the company)  You benefit from a stock in 2 ways: 1. Dividends 2. Selling it Capital Gain- Profit from stock- Sell it for more than you paid Capital Loss- sells stock at lower price then he bought it for.

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7  The government or a company borrowing money from you.  It promises to pay you a stated rate of interest for a specific period of time.  Savings Bond- range from $50 to $10,000. It is very safe and not taxed until cashed in. It is purchased at half the face value and increases every 6 months until maturity.

8 Types of retirement savings plans: – A pension plan is a company supported plan like a 401(k) that is not taxed until used.pension plan – A Keogh plan is a retirement plan for self- employed individuals.Keogh plan  An individual retirement account (IRA) is a private retirement plan for individuals.individual retirement account Contributions are deductible from taxable income. Taxed when taken out.

9 – A Roth IRA is a private plan for individuals.Roth IRA Taxes income before it is saved. Does not tax interest on that income when funds are used upon retirement. – Buying real estate, such as land and buildings, is another form of long term investing.

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11  How much to save and invest is determined by each individual’s income, risk tolerance, and values.  The higher the promised return on an investment, the greater the risk.  When you have very little income, you should probably put your savings lower risk accounts.  It is important to practice diversification to lower your overall risk.diversification  Your values may also determine where you invest your savings.

12 Stocks are shares of the Company. Savings bondsSavings bonds are issued by the federal government as a way of borrowing money.

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